Mastery Series: How to Monitor Your APY and Maximise Your Rewards

Welcome back to the next instalment of the SubQuery Mastery Series, where we help you navigate the SubQuery Network and ensure your SQT is put to good use! This article will be about maximising your Annual Percentage Yield (APY) as a Delegator. We’ll share all the tips and tricks to ensure you're perfectly positioned to receive top rewards.

First, we’ll run through a refresher on APY, then cover the lifecycle of your SQT staking (delegating) and then how to make sure you’re on top of the commission rate offered by your Node Operators and how to know when it might be time to switch Node Operators.

Ser, what is APY?

APY, or Annual Percentage Yield, is a term you hear in web3 that measures how much rewards you can expect from locked or saved tokens over a year. An example is when you delegate SQT tokens to the SubQuery Network, you receive rewards in the form of extra SQT from Node Operators.

In short, APY helps you understand the total amount of SQT rewards you'll receive from participating in the SubQuery Network on an annualised basis. For more information, you can read our introduction to Estimated APY article.

The Delegation Lifecycle

As a Delegator, you stake your SQT tokens on Node Operators and then share in the SQT rewards pool for the work they perform. The lifecycle stages of a delegator are outlined below.

Delegating: Delegators stake or delegate their SQT by depositing it into a Node Operator’s contract.
Redelegating: Delegators can move their delegation around and decide how much to redelegate to each Node Operator of their choice.
Undelegating: Delegators can undelegate (withdraw) tokens back to their wallet. This will trigger a lock period.
Withdrawing: After the unlocking period has been completed, tokens become available for withdrawal/claim.

Of course, if you’re happy with your Node Operator (and that is the goal!) then you can sit for a long period in step 1, there is no need to redelegate or undelegate if you’re happy with the rewards you’re receiving and have built a trusting relationship in your chosen Node Operator(s).

Later in the article, we will go more deeply into redelegating vs undelegating.

Checking the APY Offered by Node Operators

When selecting a Node Operator to delegate your tokens to, be sure to check the estimated APY for that Node Operator. This is an estimate of the total amount of SQT rewards you'll receive per year by delegating to this particular Node Operator.

The estimated APY is based on a few different factors including the Node Operator’s work output and the commission rate they offer:

Work output: The more queries/requests served to Consumers, the more rewards Node Operators receive (and the more rewards their delegators receive).
Price: Node Operators can set their own price per query (currently 1 SQT/1000 queries). However this can influence the work received, as a lower price can attract more Consumers and therefore the opportunity for a higher work output.
Stake size: Node Operators are rewarded for having higher staked SQT amounts to encourage them to actively participate in the network and to have “skin in the game”.
Commission: The higher they set their commission rate, the larger proportion of the rewards pool they keep for themself (therefore less of a rewards pool shared with their delegator).

The higher the estimated APY, the more rewards you can expect in return when delegating your SQT to this Node Operator.

Of course, this figure could change depending on the Node Operator’s actions (for example they may increase their commission rate or their performance may change) but the estimated APY gives you a good indication of their past performance and what you can expect from delegating your SQT here. Read on below to understand more about Node Operators adjusting their commission rate.

How to Identify When a Node Operator is Adjusting their Commission Rate

Node Operators set a Node Operator’s Commission Rate (NOCR) which is the percentage share of the rewards received by Node Operators from serving requests to Consumers. Therefore, a lower NOCR will be more attractive for Delegators as a larger percentage of rewards is shared between Delegators.

To understand NOCR in more depth, head to our docs on the topic.

If a Node Operator wishes to increase the Node Operator Commission Rate that they offer to their Delegators, this will be clearly displayed for the entire staking Era (currently 7 days). Conversely, Node Operators will be able to decrease their Node Operator Commission Rate (NOCR) at any point to attract more Delegators.

A great way to stay on top of these changes is by regularly checking the notification centre which will inform you if any of your Node Operators are changing their NOCR.

If the Node Operator is planning to increase their commission rate, then you can easily redelegate your SQT to another Node Operator, this will automatically switch your delegation from one operator to another at the end of the Era. When you redelegate, you don’t miss out on any rewards, and therefore it’s much better than undelegating, since you must wait for a lock period whenever you undelegate.

Redelegating v Undelegating

If you’re not receiving the rewards you hoped for, you're dissatisfied with your Node Operator or you’re simply looking to try out a new one, then redelegating is the perfect option for you. You can redelegate without waiting for an unlocking period. This is the most efficient way to move your delegated SQT between Node Operators and avoid missing out on the rewards from any Era.

The other alternative is completely undelegating your SQT however, if you do this, you will need to wait for the 14-day unlocking period and you will not receive any rewards during that period. We would only recommend this if you’re looking to withdraw your SQT back to your wallet. To undelegate you need to do the below:

Undelegate (here you wait for the 14-day unlocking period)
Withdraw your SQT back to your wallet (once the unlocking period is complete)

The moral of the story is that if you’re looking to maximise your APY, then be sure to redelegate when switching between Node Operators so you avoid an unlocking period wherein you receive no rewards.

For more on redelegating and undelegating, check out our earlier Mastery Series article on this.

Go forth and APY

Now that you know all about APY and the factors that contribute to it, you’re ready to jump into the SubQuery Network and make sure your SQT is positioned for max rewards! If you have any questions, be sure to join our Discord and ask our helpful community on the #network-delegator-chat.

Head to the SubQuery Network app and get started.

About SubQuery

SubQuery Network is innovating web3 infrastructure with tools that empower builders to decentralise the future. Our fast, flexible, and open data indexer supercharges dApps on over 200 networks, enabling a user-focused web3 world. Soon, our Data Node will provide breakthroughs in the RPC industry, and deliver decentralisation without compromise. We pioneer the web3 revolution for visionaries and forward-thinkers. We’re not just a company — we’re a movement driving an inclusive and decentralised web3 era. Let’s shape the future of web3, together.